Global push for virtual cards
THE World Travel Agents Associations Alliance (WTAAA) has urged airlines to look beyond “blanket payment policies” and consider allowing the use of new, lower-cost virtual credit card options for settlements with travel agents. A statement issued by WTAAA chair Otto de Vries from the Association of South African Travel Agents suggests a “more holistic view must be taken… instead of simply saying ‘no’ to card payments because of the perceptions around cost”.
De Vries noted that IATA’s NewGen ISS and Transparency in Payments initiatives (travelBulletin July 2018) aim to address the changing payment environment and reduce risk — but the “one dimensional approach” has only focused on a single virtual card type as being representative of all virtual cards. “Rather than encouraging commercial discussions, this has inhibited them. The result is that airlines and other parts of the travel value chain are missing out on the benefits that other lower cost virtual cards offer,” he said.
The WTAAA chair noted that currently billions of dollars are settled between travel agents and other travel suppliers using systems that offer all of the risk-mitigation aspects desired by NewGen ISS but in a “modern way”. De Vries said the use of virtual cards by travel agents mean airlines are guaranteed to receive 100% of their funds within a matter of days. “And the same goes for travel agents… they no longer have to take on the risk of forward-dated travel, thanks to chargeback protection they can draw on should an airline fail”.
“If the airline industry is truly behind a new generation of payments, cards need to be directly in the conversation and simplicity needs to prevail, rather than further heavy-handed costly compliance that serves no real purpose,” De Vries concluded.